We just bought a house and our current mortgage with PITI will be about 5,940. We have little dept and our income is 225k. I did the math with all our numbers and we are looking at a DTI of 40-41%. I know this is a stretch but we got the house under market value and we love it. My question is, am I stupid? Lol.
We do have a 3 year old and my wife is pregnant with another. We have free child care with my wife’s mother.
My game plan is to live it in for a couple of years to see how we can handle this with an exit plan of selling if it’s too much. We do have about 6 months of reserves as well saved. Are we screwed?
> We just bought a house and our current mortgage with PITI will be about 5,940. We have little dept and our income is 225k. I did the math with all our numbers and we are looking at a DTI of 40-41%.
Your front end number is only 32%. Are you referring to your back end number?
> My question is, am I stupid? Lol.
What’s it matter now, either way? You already did it.
Your numbers strike me as fine given your income level and actually liking your house; many folks buying right now have worse numbers and a house they feel like they’re compromising on.
> Are we screwed?
Doesn’t seem like it to me. Generally, though, when you sell within “a couple years”, you generally have to come out of your own pocket to sell, given lack of appreciation and the high transaction costs.
@Parrish
His live someone who buys an expensive house (depending on the area) and then decides to run the numbers to see if it makes sense or it’s a bad idea.
This is the largest purchase most people make their entire lives and you aren’t even sure if the math works? Wild man.
@Niko
I’ve done the math hundreds of times and it works out, even saving about 3k after everything, but I won’t know for sure till we get the first mortgage payment.
Delaney said: @Parrish
Yes backend DTI. I’m just super nervous about it. I don’t plan on selling in 2 years if we can manage, that’s only if we are struggling.
> Yes backend DTI. I’m just super nervous about it.
Do you have a budget? Do you track your spending? I know I didn’t feel comfortable until I had a well-worn budget telling me that I could, in fact, afford it.
Afford is a tricky word, and it means different things to different people.
You probably have a typical upper middle class situation, where you can afford anything you want, but not everything you want, and you decided the anything was pretty much this particular house…
Delaney said: @Parrish
We do have a budget we follow which we manage to save 5500 a month after all expenses with a 2500 rent payment.
I imagine you’re coming out about even.
Before, you had $8k/mo in housing+savings, and now you probably also have about $8k/mo in housing expenses, $6k in mortgage PITI(A) and another $2k/mo in upkeep, set asides for maintenance, and new/marginal utilities costs.
My salary is higher than yours and my mortgage is in the 4k region. And I hate paying it every month. Also have little to no other debt. Been doing it for almost 2 years and it’s still stressful to be paying that much. I can’t imagine paying what you are. Are your utilities cheap at least? Plus side is house is worth another 1-2 hundred thousand since we bought it. Sometimes I want to sell it and live in a cardboard box. But the rest of my family loves the house and it makes sense for us so I’ll keep slaving away to pay for it…
@Delaney
Chino hills is a nice new area. Buddy of mine lives there and we’ve visited often back then. You’re not screwed because of your income. But you should have a nice healthy emergency fund ready. If the income drops, then you are screwed. Otherwise, you’re good. For now.
@Delaney
That’s honestly impressive to be able to save $5k+ a month when your mortgage is close to $6k plus all the other expenses of living (utilities, cars, insurances, gas, groceries, kids, spending). You’re in a good spot if you’re saving that much money a month somehow on that HHI.